As part of its research mandate the Municipal Services Project
has been conducting comparative studies on the privatization of
municipal services in other parts of Africa and Latin America.
This report presents the findings of a study of the private water
and sanitation concession in Buenos Aires, Argentina. This is the first major
English-language study of the concession conducted outside of the World
Bank Group since the concession began in 1993.
The decision to conduct research on the Buenos Aires water system was
taken for several reasons. First, it is one of the largest water concessions
in the world – servicing a population of 10 million people – and has been
hailed as a success story internationally. It is important, therefore, that
South African policy makers review this model in their own deliberations
over private sector involvement in water and sanitation delivery.
Second, the major shareholder in the consortium that operates the
water concession in Buenos Aires is Suez Lyonnaise des Eaux, a large
French multinational that is also active in South Africa. Lyonnaise des Eaux
is involved in the Johannesburg water management contract and has been
actively pursuing contracts in other South African cities, as the opening
quote to this executive summary attests to.
Third, there have been at least two trips to Buenos Aires by South
African policy makers and bureaucrats to review the water concession as
a possible model for South African municipalities. The first trip, taken in
1997 by a councilor and a senior engineer from Cape Town (paid for by the French government), was extremely positive in its evaluation of the
concession, arguing that it has been “remarkably successful” in turning
around an otherwise “potentially disastrous situation” (Bekker and Marsden
1997, 10). A second trip taken in May of 2000, involving 12 senior
local government officials from various parts of South Africa, was similarly
positive in its review (PADCO 2000).
Our own research findings are much more critical of the concession.
Although there have been some positive developments in terms of investments
in infrastructure and the extension of services since 1993 there have
been some major failures as well. While some of these failures are unique
to Buenos Aires and the politics of Argentina, they do raise some more
general questions around the role of the private sector in the delivery of
municipal services, and challenge some of the widely held arguments in
favour of privatization.
The following paragraphs provide a brief overview of the main findings
of our research, with a specific focus on the themes of accountability
and efficiency. Our intention here is to flag what we consider to be the
most serious problems with the Buenos Aires water concession in hopes of
contributing to the ongoing debate over private sector involvement in the
water and sanitation sectors in South Africa...